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Business & farm
To be clear, I do not disagree that at-risk comes after basis in the ordering rules of loss limitations.
However, in order to get tax software packages to handle the limitation correctly and track disallowed losses, form 6198 is used.
If your tax return is being completed by a tax professional who has the understanding and ability to track suspended losses independently and can use overrides and still be able to efile; that is a different story.
Additionally, in the S corporation context, basis and at-risk are pretty much identical; hence using the form 6198 accomplishes the task and arrives at the correct result.
A snippet from the form 6198 instructions:
File Form 6198 if during the tax year you, a partnership in which you were a partner, or an S corporation in which you were a shareholder had any amounts not at risk .
Clearly an S corporation shareholder who has no basis, also has no at-risk and using form 6198 accomplishes the task and the taxpayer files an accurate tax return.
Also keep in mind the date of replies, as tax law changes.